Rad Power Bikes’ Downfall: How Tariffs and Market Shifts Brought an E-Bike Giant to Bankruptcy
Rad Power Bikes, once the poster child of e-bike innovation in America, has filed for Chapter 11 bankruptcy protection after a dramatic rise and fall that mirrors the broader electric bike industry’s turbulent journey. The Seattle-based company, which reached a staggering valuation of $1.65 billion in 2021 during the pandemic-fueled cycling boom, now faces a sobering reality with liabilities nearly double its assets. Perhaps most revealing is that the company’s largest creditor isn’t a supplier or manufacturing partner, but rather U.S. Customs and Border Protection, which is owed more than $8.3 million in disputed tariffs. This single detail encapsulates the complex challenges that have plagued Rad and similar companies – caught between shifting consumer demand, complex international trade policies, and the harsh economic realities of building a sustainable business in the electric transportation sector.
The Rad Power Bikes story represents a cautionary tale about the dangers of explosive growth without sustainable foundations. Founded in 2015, the company pioneered a direct-to-consumer model selling sub-$2,000 e-bikes that appealed to casual riders rather than cycling enthusiasts. This approach proved revolutionary during the COVID-19 pandemic, when demand skyrocketed nearly 300% as Americans sought outdoor recreation and alternative transportation options. The company’s meteoric rise attracted over $300 million in investment by 2021, cementing its position as North America’s largest e-bike seller. However, this rapid expansion created vulnerability when market conditions shifted. According to Rad’s letter to employees last month, the company failed to anticipate “the sudden drop in consumer demand from COVID-era peaks,” leaving it saddled with excess inventory and mounting costs. The numbers tell a stark story: gross revenue plummeted from $129.8 million in 2023 to $103.8 million in 2024, with only $63.3 million recorded so far this year. With total liabilities reaching nearly $73 million against just $32 million in assets, the financial picture became untenable.
While shifting consumer demand contributed significantly to Rad’s troubles, the impact of trade policies and tariffs cannot be overstated. The Washington Post recently highlighted how import duties under both the Biden and Trump administrations created financial headwinds for e-bike companies reliant on Asian manufacturing. When the Biden administration allowed an exemption for e-bikes from tariffs on Chinese imports to expire last year, the industry faced dramatic cost increases. According to PeopleForBikes, a trade group representing the industry, average tariffs on e-bikes jumped from approximately 11% to between 20% and 55% – a crushing blow to companies already operating on thin margins. Matt Moore, policy and general counsel for PeopleForBikes, observed that these tariffs were “stressing U.S.-based companies, in some cases past the breaking point, while not seeming to have much effect on foreign marketplace sellers who are doing business as usual.” This uneven playing field created particular challenges for companies like Rad that had built business models assuming a certain cost structure.
The e-bike industry’s vulnerability stems partly from its position at the intersection of several competing policy priorities. On one hand, electric bikes represent a promising solution for reducing carbon emissions and traffic congestion in urban areas – goals ostensibly supported by the current administration’s climate initiatives. On the other hand, they’ve become entangled in broader trade disputes with China and industrial policies aimed at reshoring manufacturing. Ed Benjamin, chairman of the Light Electric Vehicle Association, described this regulatory environment as creating “confusion and chaos” across the industry, making future purchasing decisions exceedingly difficult amid uncertainty over costs. Industry publication Electrek put it more bluntly, stating: “There’s no coherent strategy here, just a patchwork of protectionist measures that hurt importers, confuse dealers, and raise prices for consumers. If the U.S. wants to promote micromobility and clean transportation, it’s going to need smarter policies than this.” The tension between environmental goals and trade policy has created a particularly challenging landscape for companies in this sector.
Rad Power Bikes is far from alone in its struggles. The industry has witnessed a concerning pattern of bankruptcies and closures, with companies including E-Cells, Kent International, Fuell, Juiced, and Electric Bike Company all citing tariffs as contributing factors in their downfalls. These failures raise important questions about the future of electric mobility in America. While U.S. Customs and Border Protection recently celebrated collecting more than $200 billion in tariffs under Trump-era executive orders, touting this as evidence of “promoting secure, fair, and compliant trade,” the human and business costs of these policies deserve equal consideration. The Supreme Court is currently weighing whether former President Trump exceeded his authority in imposing these tariffs, with Costco and dozens of other companies filing lawsuits seeking refunds if the duties are ruled unlawful. For companies like Rad Power Bikes, however, legal vindication may come too late to save their businesses and the jobs they created.
The story of Rad Power Bikes serves as a reminder that even promising industries with strong environmental and consumer benefits can falter when caught between shifting market forces and inconsistent policy frameworks. The company that once symbolized the democratization of electric transportation – making e-bikes accessible to everyday Americans rather than just enthusiasts – now faces an uncertain future in bankruptcy proceedings. For policymakers, the lesson might be that tariffs and trade restrictions, while potentially valuable tools for achieving certain economic objectives, can have unintended consequences for emerging green industries. For entrepreneurs and investors, Rad’s journey highlights the dangers of rapid scaling without sufficient cushion for market fluctuations. And for consumers who embraced affordable electric mobility, the bankruptcy represents a setback in the broader transition toward sustainable transportation options. Whatever Rad Power Bikes’ ultimate fate, its story will likely be studied as both a testament to innovation and a cautionary tale about the complex interplay of market forces and government policy in shaping new industries.
